Political Windfall Unlikely to Move CBS Shares

March 2, 2010

NEW YORK: Analysts expect politics to pay well this
year. Broadcasters are expected to reap as much as $2.1 billion from political
and campaign advertising. A court ruling removing the limit on corporate
spending on political advertising is projected to lend anywhere from $300
million to $450 million to the total.

“CBS is expected to take significant share of extra ad spending,” said a note
from Boston-based stock analysis firm Trefis. However, the added revenues are
unlikely to affect share prices. Trefis projected the court-triggered spending
bonus on the low end.

“About $3 billion will be spent in 2010 towards political campaigns,” the firm
said, referring to the total across all media. “With the new court decision, an
extra $300 million is likely to be infused into the TV ad market. This
extra $300 million amounts to less than 1 percent of $45 billion overall TV ad
spend in 2009.”

CBS is in line to collect around one-third, or $100 million of that, Trefis
said.

“However this will only increase its broadcast network revenues by about 2
percent,” the firm said. “Even an increase of $100 million for each of our
forecast years leads to upside for CBS of about 10 cents per share, or about 1
percent of the $9.22 Trefis
price estimate for CBS’s stock.”

Shares of CBS are down about 3 percent year-to-date, trading at $13.65 in
mid-afternoon. CBS (NYSE: CBS.A) shares pulled up from around $13 last week in
what appears to be a wider market rebound. The disparity between market price
and the Trefis estimate is due to the firm’s analysis factors, including
audience migration away from broadcasting and over-reliance on advertising.

The last factor is changing, according to CBS chief Les Moonves, who said this
week that retrans will generate $250 million in 2012. That’s still a small
amount of total mothership revenues. CBS Corp. generated more than $13 billion
last year.

“For CBS, the state of the overall ad market is much more important than the
extra political ad spend to result from the recent Supreme Court decision,” the
Trefis note said.

CBS gets an estimated $4.70 per thousand viewers for a 30-second spot, an
amount that Trefis said was trending downward. Moonves, however, said fourth quarter
scatter was up 25 percent and that the current quarter is pacing 30 percent up.

“We are seeing more than the light at the end of the tunnel,” he said.
-- Deborah D. McAdams